If there’s one thing retailers have in common, it’s data. Data comes from everywhere: POS systems, receipts, operations, financial records, and marketing – if you could put it all together, you would have a pretty good picture of the enterprise.
Retailers share a common belief that putting data in people’s hands will beget more informed business decisions and, therefore, better performance. Because of this notion, many are turning to self-service business intelligence and analytics tools in order to ensure that critical intelligence can be quickly and more directly accessed by everyday business operators.
These tools enable them to hook up to various internal and external silos, grab data and mash it up at will. They see this localized information as a key to smarter decision-making – and they’re correct. It is the great power of modern BI to remove guesswork by enabling users to have the information they need at their fingertips. Making it available faster than the competitor is – shades of Sun Tzu – a distinct business advantage.
Unfortunately, too much power can sometimes lead to problems that are much bigger than the perceived advantage. The most important of these is having access to a data source that hasn’t yet been thoroughly vetted, through a feature called “mash-up.”
Mash-up tools can pull histories from various sources that have little or no correlation, ultimately resulting in very well dressed and believable reports that may convey false insights to many levels of the organization. Once acquired, recalculated and published, it becomes impossible to tell whether it’s true.
Hence the risk of ungoverned information: without original data that is guaranteed valid, the best BI tools can become vehicles for rapidly spiraling mistakes based on gorgeous looking misinformation.
Controlling the power
Data governance is integral to ensuring these resources are providing the most precise perspective and helping a retailer to make the optimal decisions to the challenges happening right now. Retailers looking to leverage the power of modern analytics tools without the attending risk should consider all of these: the sources, the user, the metrics and the practice.
Vet the sources
Make it the primary responsibility of IT to guarantee the accuracy and reliability of outside data sources. Things change frequently and, therefore, it is necessary to know the schema of the source and to stay current on changes in the calculations that make up the input fields. A number that looks irreducible may in fact be formulated from several numbers, some of which may be altered from time to time. Unwitting inclusion of altered numbers in important calculations can have long-term negative effects on performance.
Focus on the User
A common BI misconception is the notion that providing access to unlimited information is by definition a good thing – in other words, “more is better.” But expanding access means more time spent exploring, drilling, slicing, dicing, mashing and sharing. Wide access to unlimited data may seem like a good thing, but it can lead to big problems when it comes to accuracy.
Therefore, it’s important that retailers ensure right they’re matching data and access to strategy, the desired outcome and the person. Besides, most managers have plenty to do already and the last thing they need is fascinating information that doesn’t add value.
Focus on the metric
Next comes measurement. There are tens of thousands of metrics that can capture the interest of the everyday business operator, but only a few of them really count.
For example, a key productivity measure for a category manager could be increasing marginal contribution per square foot of merchandising space. That specific manager needs fingertip access to everything about plan-o-gram, product cost, POS and vendor support to get the most profitable SKUs in the best place, but likely has little need to pull data about things such as labor and store operations. Matching the correct metrics to right people will ensure a retailer is providing accurate data to make smart decisions.
Harness the technique
One of the greatest impacts of modern BI is its potential to change the work paradigm itself, from latent periodic summary reporting to hyper-speed investigation and direct continuous performance improvement.
This is made possible by the merger of extremely fast data computing with the human mind’s unique ability to recognize patterns and trends hidden among vast data. This radical shift in intelligence processing and accessibility allows retailers to put all the relevant data directly in the hands of everyday decision makers, who can then, spot outliers, analyze root causes, fix deficiencies and, over time, perfect the process.
Overall, the keys to harnessing self-service analytics tools is to focus intensely on the integrity of source data, measure the things that matter and drive the information back to the point of value creation. This creates a continuous improvement environment where those closest to the consumer can see best and fix problems most precisely.
(About the author: Guy Amisano Sr. is the founder and chief executive officer of Salient Management Company, a provider of performance management solutions with experience developing industry-specific strategies for businesses in retail and wholesale distribution markets.)
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